EUR/GBP balances below 0.8600, downside remains favored ahead of BOE

• EUR/GBP is oscillating below 0.8600 as investors await an interest rate decision by the BOE.
• The BOE is expected to raise its interest rates by 25 bps to 1.25%.
• The inflation figures in the eurozone are expected to remain stable.

The EUR/GBP is displaying back and forth moves in a narrow range of 0.8569-0.8596 from the late New York session. Earlier, the pair witnessed a perpendicular downside move after failing to surpass the critical hurdle of 0.8520 on Wednesday. A minor consolidation range after a sheer downside fall indicates an initiative selling structure, which may bring further downside in the cross.

Investors are expected to remain on the sidelines until the announcement of the interest rate decision by the Bank of England (BOE). As per the market consensus, the BOE is expected to elevate its interest rate by 25 bps. Considering the mounting price pressures, the BOE should go for an unconventional rate hike. However, the downbeat Gross Domestic Product (GDP) and higher Unemployment Rate released this week, has restricted the BOE to explore extreme policy tightening measures.

This week, the UK Office for National Statistics reported the monthly GDP at -0.3% vs. 0.2% forecasted. While the UK jobless rate climbed to 3.8% from the expectations of 3.6%.

On the eurozone front, the release of the Harmonized Index of Consumer Prices (HICP) will be the major event, which will be on investors’ radar. The HICP figure is expected to remain stable at 8.1% on an annual basis. Also, the core HICP that doesn’t include food, energy, alcohol, and tobacco is seen unchanged at 3.8%.